Philadelphia Raises Stakes With Plan to Reverse Blight (New York Times)

New York Times
(9/22/2013 9:56 PM, Jon Hurdle)

Philadelphia -- With an estimated 40,000 abandoned houses, lots and commercial buildings, Philadelphia wants to consolidate its inventory of distressed real estate by creating a “land bank” to make purchase more attractive to potential buyers.

If the City Council votes this fall, as expected, to establish the land bank, Philadelphia will join Syracuse, Macon, Ga., and a number of other cities that have adopted plans like it to encourage buyers who are committed to making improvements, instead of speculators, to acquire tax-delinquent properties.

“There are new tools to allow government to acquire tax-delinquent properties without putting them out on the market to the highest bidder,” said Rick Sauer, executive director of the Philadelphia Association of Community Development Corporations, which is helping to lead the land-bank initiative.

To keep property from speculators who might sit on it for years without improving it, he said, the land bank would insist that buyers were current on taxes, had no history of code violations and had the resources to make promised changes.

“You want to put it into the hands of a responsible property owner who is going to put it back into productive use sooner rather than later,” Mr. Sauer said. A city ordinance “would provide a means for the land bank to go in and pull those properties out before they are exposed to the private market.”

Philadelphia’s neighborhoods, like those of some other older cities, are pockmarked with derelict buildings and overgrown lots that have been abandoned because of foreclosure, unemployment or the decline of manufacturing. The vacant properties cost the city millions of dollars to maintain, and they reduce the tax revenue that could come with occupancy. About 75 percent are privately owned, officials say, and many of those are tax delinquent.

If Philadelphia’s proposed land bank succeeds, its scope will become an example for other cities, like Detroit and New Orleans, that are struggling with large numbers of vacant properties and multiple city agencies that are responsible for them, said Frank Alexander, a professor of real estate law at Emory University and an author of many land-bank laws in other cities.

“If Philadelphia moves forward with this, it will be a very good model for Detroit,” which has an estimated 50,000 to 60,000 vacant properties, he said.

The proposal would take advantage of a 2012 Pennsylvania law that has already been put into effect elsewhere in the state.

In Philadelphia, many individuals are deterred from buying tax-delinquent properties by having to deal with a maze of public agencies or with difficulties in finding the private owners. The land bank would take control of vacant, publicly owned properties from four city agencies, leaving the city in a better position to combine them with private real estate that it would acquire to create blocks more likely to attract developers.

The land bank would also be able to acquire specific properties that threaten to bring down an otherwise healthy block.

“Otherwise, you have a cancer that begins to form, and one vacancy leads to another, and people stop investing in their homes and businesses,” Mr. Sauer said.

Advocates for land banks envision a variety of uses for the abandoned properties, including market-rate and affordable housing, commercial development, and open space.

Other uses could include community gardens or urban farms. For the last 17 years, a project known as Greensgrow has been growing vegetables and making compost on the site of a former galvanizing factory in a low-income area of North Philadelphia.

This month, Mary Seton Corboy, a co-founder of Greensgrow, gave a tour of the farm to delegates attending a conference in Philadelphia sponsored by the Center for Community Progress, a national nonprofit organization that works to revitalize abandoned and blighted real estate. She said the land, once designated by the Environmental Protection Agency as a Superfund cleanup site, showed how abandoned property could be revived for the benefit of the surrounding low-income community.

Reducing the number of blighted properties also helps maintain the value of surrounding real estate and saves money on maintenance to prevent further deterioration, land-bank managers say.

Currently, Philadelphia sells 150 to 200 vacant properties per year, said Mr. Sauer, who argued that sales would not significantly increase without a land bank.

“The status quo doesn’t work,” he said.